Exemption from being sued out of the district of its domicil is
a privilege which a corporation may waive, and which is waived by
pleading to the merits.
The fact that neither the plaintiff nor the defendant resides in
the district in which the suit is brought do not prevent the
operation of the waiver.
Page 151 U. S. 130
When a defendant corporation voluntarily submits itself to the
jurisdiction of a circuit court of the United States, its action
cannot be overruled at the instance of stockholders and creditors
not parties to the suit so brought, but who were permitted to
become parties by an intervening petition.
On the 8th day of August, 1892, the Central Trust Company, a
corporation created by and existing under the laws of the State of
New York, filed a bill in equity in the Circuit Court of the United
States for the Western District of Virginia against the Virginia,
Tennessee and Carolina Steel and Iron Company, created by and
existing under the laws of the State of New Jersey.
The bill alleged that the defendant company had a place of
business and carried on its business at Bristol, in the Western
District of Virginia, and owned property, real and personal at
Bristol, and elsewhere in the State of Virginia; that the said
defendant company was insolvent; that the plaintiff company had
obtained a judgment on the law side of the court on which an
execution had been sued out and returned by the marshal
nulla
bona, and prayed for the appointment of a receiver. The
defendant company appeared by its President, John C. Haskell, and
consented to the appointment of a receiver, and thereupon Judge
Bond made an order appointing said John C. Haskell and D. H.
Conklin receivers of said defendant company.
On the same day, two other bills were filed in suits styled as
follows:
The Central Trust Company of New York v. The South
Atlantic and Ohio Railroad Company," and "The Virginia, Tennessee
and Carolina Steel and Iron Co. v. The Bristol Land
Company.
In each of said additional bills, the complainant company
alleged the insolvency of the defendant company, as evidenced by a
judgment obtained against it by confession in the court on its law
side, on which an execution had issued and been returned on the
same day as
nulla bona. In the first-named of these last
two suits, the defendant company appeared by its vice-President,
John C. Haskell, and consented that a receiver should be appointed,
and in the last-named suit the
Page 151 U. S. 131
defendant company appeared by its president, John C. Haskell,
and consented to the appointment of a receiver, and thereupon Judge
Bond appointed said John C. Haskell and D. H. Conklin receivers of
each of said companies, respectively.
On the 19th day of October, 1892, a petition was presented to
the circuit court by William McGeorge and others, claiming to be
stockholders and creditors of the Virginia, Tennessee and Carolina
Steel and Iron Company, and John M. Bailey, claiming to be the
"valid receiver" of the corporations named, by virtue of an order
made by Hon. D. W. Bolen, Judge of the Fifteenth Judicial Circuit
of Virginia, in vacation, on the 6th day of August, 1890, asking
that they might be made parties complainants or defendants, as the
court might determine, and that the several causes named might be
consolidated and heard together. The petition further alleged that
the Virginia, Tennessee and Carolina Steel and Iron Company was the
main and substantial company; that the South Atlantic and Ohio
Railroad Company and the Bristol Land Company were mere offshoots
or dependent companies; that the several confessions of judgments
entered in the court on the 8th day of August, 1892, were made by a
person who had no power or authority to make such confessions of
judgment; that said judgments were procured by fraud and collusion
between the representatives, respectively, of the complainant and
defendant companies, and that the orders made by Judge Bond
appointing receivers for each of said defendant companies were
obtained by misrepresentation, fraud, and collusion by and between
said representatives of the complainant and defendant companies.
The said petition further alleged that in the cause of
The
Central Trust Company of New York v. The Virginia, Tennessee and
Carolina Steel and Iron Company the court was without
jurisdiction, for the reason that the complainant company was a
corporation created by and existing under the laws of the State of
New York, and a citizen and resident of said State of New York, and
that the defendant company was a corporation created by and
existing under the laws of the State of New Jersey, and a citizen
and resident of said State of New Jersey.
Page 151 U. S. 132
The said petition was filed by leave of the court, and a rule
was awarded, returnable on the 6th day of December, 1892.
The complainant company, the Central Trust Company of New York,
filed an elaborate answer to said petition denying under oath its
material allegations. The defendant company, the Virginia,
Tennessee and Carolina Company, filed a separate answer to the said
petition denying its allegations, as did also the other two
defendant companies.
On the 16th day of May, 1893, the district judge filed an
opinion and decree declining to consolidate the said cases and
treating the petition of McGeorge and others as the answer of
codefendants. The court decided that it had no jurisdiction,
because while the parties complainant and defendant were citizens
of different states, yet neither of them was a citizen of the state
in which the suit was brought. The order appointing the receivers
was accordingly vacated, and the bill of complaint dismissed. 55 F.
769. From this decree, an appeal was taken and allowed to this
Court.
MR. JUSTICE SHIRAS, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The court below, in holding that it did not have jurisdiction of
the cause and in dismissing the bill of complaint for that reason,
acted in view of that clause of the Act of March 3, 1887, as
amended in August, 1888, which provides that
"No civil suit shall be brought in the circuit courts of the
United States against any person, by any original process or
proceeding, in any other district than that whereof he is an
inhabitant,"
and, undoubtedly, if the defendant company, which was sued in
another district than that in which it had its domicile, had, by a
proper plea or motion, sought to avail itself of the statutory
exemption, the action of the court would have been right.
But the defendant company did not choose to plead that provision
of the statute, but entered a general appearance, and joined with
the complainant in its prayer for the appointment
Page 151 U. S. 133
of a receiver, and thus was brought within the ruling of this
Court, so frequently made, that the exemption from being sued out
of the district of its domicile is a personal privilege which may
be waived, and which is waived by pleading to the merits.
In
Ex Parte Schollenberger, 96 U.
S. 378, which arose under the Judiciary Act of 1875, it
was said:
"The act of Congress prescribing the place where a person may be
sued is not one affecting the general jurisdiction of the courts.
It is, rather, in the nature of a personal exemption in favor of a
defendant, and it is one which he may waive. If the citizenship of
the parties is sufficient, a defendant may consent to be sued
anywhere he pleases, and certainly jurisdiction will not be ousted
because he has consented."
So, under the Act of February 18, 1875, 18 Stat. 316, which
exempted national banks from suits in state courts in counties
other than the county or city in which the bank was located, it was
held, in
Bank v. Morgan, 132 U. S. 141,
that such exemption was a personal privilege which could be waived
by appearing to such a suit brought in another county and making
defense without claiming the immunity granted by Congress.
St. Louis & San Francisco Railway v. McBride,
141 U. S. 127,
141 U. S. 131,
was a case wherein it was contended in this Court that the court
below the Circuit Court of the United States for the Western
District of Arkansas, had no jurisdiction because the suit was
brought against a railway company whose domicile was in another
state, and therefore within the operation of the Judiciary Act of
1887, as amended in 1888, providing that no suit shall be brought
against any person in any other district than that whereof he is an
inhabitant; but it was held, citing
Ex Parte
Schollenberger, 96 U. S. 378,
and
Bank v. Morgan, 132 U. S. 141,
that
"without multiplying authorities on this question, it is obvious
that the party who in the first instance appears and pleads to the
merits waives any right to challenge thereafter the jurisdiction of
the court on the ground that the suit had been brought in the wrong
district."
The court below based its ruling on
Shaw v. Quincy Mining
Co., 145 U. S. 444, and
on
Southern P. Co.
v.
Page 151 U. S. 134
Denton, 146 U. S. 202, and
it is true that the right of a corporation to avail itself of the
exempting clause of the act of 1887 was there maintained; but in
both cases, the defendants specially appeared and set up such right
-- in the one case by a motion to set aside the service of the
process and in the other by a special demurrer.
The opinion in
Shaw v. Quincy Mining Co. contains a
full history of the legislation on this subject, and refers to the
several questions that have arisen and been determined by this
Court under such legislation. The Court, speaking through Mr.
Justice Gray, said:
"The Quincy Mining Company, a corporation of Michigan, having
appeared specially for the purpose of taking the objection that it
could not be sued in the Southern District of New York by a citizen
of another state, there can be no question of waiver, such as has
been recognized where a defendant has appeared generally in a suit
between citizens of different states, brought in a wrong district.
. . . All that is now decided is that, under the existing act of
Congress, a corporation incorporated in one state only cannot be
compelled to answer in a circuit court of the United States held in
another state in which it has a usual place of business to a civil
suit at law or in equity, brought by a citizen of a different
state."
In
Southern Pacific Co. v. Denton, where the subject
was again elaborately discussed, it was said:
"It may be assumed that the exemption from being sued in any
other district might be waived by the corporation by appearing
generally, or by answering to the merits of the action, without
first objecting to the jurisdiction,"
and the case of
At. Louis Railway Co. v. McBride,
141 U. S. 127, was
cited to that effect.
The court below suggested that the present case is
distinguishable from the others in which it was held that the right
of exemption might be waived, in that neither the plaintiff nor the
defendant resided in the district in which the suit was brought,
that is, the Mercantile Trust Company, the plaintiff, had its
residence in New York, and the Virginia, Tennessee and Carolina
Company, the defendant, was a corporation of New Jersey.
Page 151 U. S. 135
But a similar state of facts existed in the case of
Shaw v.
Quincy Mining Co., inasmuch as Shaw, the plaintiff, was a
citizen of Massachusetts, and the mining company was a corporation
of the State of Michigan, and the suit was brought in the circuit
court for the Southern District of New York. Nor do we see any
reason for a different conclusion, as to the subject of waiver,
when the question arises where neither of the parties is a resident
of the district, from that reached where the defendant only is such
resident.
It is scarcely necessary to say that as the defendant company
had submitted itself to the jurisdiction of the court, such
voluntary action could not be overruled at the instance of
stockholders and creditors not parties to the suit as brought, but
who were permitted to become such by an intervening petition.
In view, then, of the authorities cited, and upon principle, we
conclude that the court below erred in vacating the order
appointing receivers and in dismissing the bill of complaint, and
we reverse its decree to that effect, and remand the cause, with
directions for further proceedings not inconsistent with this
opinion.
Reversed.
